Hedge Funds: A Great Deal for The Managers...as for the Investors..It's Quite a Different Story

NYT

Hedge Funds Faced Choppy Waters in 2015, but Chiefs Cashed In

For many managers, collecting large pay, even when performance was not tops, has become a side effect of growing bigger.

“Once a hedge fund gets to be large enough to produce incredibly outsized remuneration, the hardest part of due diligence is determining whether the investment process is affected,” said Todd Petzel, chief investment officer at the private wealth management firm Offit Capital.

“Is the goal to continue to make money in a risky environment or is the goal to preserve assets on which you collect fees?” Mr. Petzel added.

Other managers hauled in large pay packages despite losing some of their investors money.

Daniel Och, the founder of the Och-Ziff Capital Management Group, made $140 million in 2015. His firm’s flagship fund, OZ Master Fund, lost 0.28 percent last year. Other funds within the firm fared well, with its OZ Asia Master Fund up 9.64 percent.

But the firm has come under regulatory scrutiny over whether its dealings in Africa violated the Foreign Corrupt Practices Act. The publicly listed hedge fund firm has set aside $200 million to deal with a potential regulatory action.

Michael Platt, the founder of BlueCrest Capital Management, took home $260 million, according to Alpha. It was a difficult year for his firm, once one of the biggest hedge funds in Europe with $37 billion in investor money. He lost investors in his flagship fund 0.63 percent over the year and then told them he was throwing in the towel.